Principles
Practices
G
ui
din
g
The following
list outlines the
documentation,
systems
and support
mechanisms
that nonprofits
of all sizes
should have in
place to function
effectively,
sustainably and
accountably.
Checklist
In
fr
as
tr
u
ct
u
re
For 501(c)(3) Nonprofit
Organizations in Maine
Basic
Our sincere thanks to Healey & Associates for
their generous sponsorship for this fourth
edition of the Basic Infrastructure Checklist.
Copyright © December, 2012 by the Maine Association of Nonprofits. This work is made available under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 License, http://creativecommons.org/licenses/by-nc-nd/3.0/.
The following publication outlines the documentation, systems and support mechanisms that nonprofit organizations should have in place to function in a manner that is effective, sustainable and
accountable. Generally, these recommendations are applicable to small
grassroots organizations as well as to large, multi-site networks.
Much of this information is needed to receive grant funding, as well as to demonstrate professional accountability to the public, your clients, and prospective donors. Some of these items are state or federal
requirements: failure to
comply with regulations may jeopardize the organization’s legal standing. In a time of increased accountability and public scrutiny, the ability of an organization to answer questions on its operations in a precise and meaningful way facilitates the public’s trust.
Recommended items are
provided as a planning framework to help nonprofit leaders make a conscious comparison and
determination of what will best move them forward in ensuring that the
organization operates with integrity and its programs and services are of the highest possible quality. The value of adopting any practice should be measured against the time and effort it would take to create,
implement and maintain that practice.
Because most of the Maine Association of Nonprofit’s (MANP’s) members are 501 (c)(3) public charities, this
checklist is tailored to the particular needs of those organizations. Other kinds of organizations, including 501(c)(4)s and 501(c)(3) private foundations, are subject to somewhat
different legal requirements. Therefore, although much of the content of this checklist applies to these latter organizations as well, extra care should be taken to ensure compliance with all relevant laws and
regulations.
For legally required items, the relevant Maine or US statutes have been cited. To read these statutes, search the following websites: ME - http:// www.mainelegislature.org/ legis/statutes/search.htm US - http:// www.gpoaccess.gov/uscode/ browse.html
Please note that while
this document is
grouped by topic area,
many
recommendations
relate to more than
one topic, and readers
should review the
document as a whole
for the most
comprehensive
guidance.
This checklist is based on a similar document created by the Michigan Nonprofit Association. We appreciate their generosity in sharing their information and experience with MANP.
Introduction
We used the Guiding
Principles + Practices for
Nonprofit Excellence in
Maine to self-assess and
that has
shown us
how we can continue
to strengthen our
organization
and
increase its effectiveness.
—Jane Morse, Nancy Nellis,
Organization Committee
Co-Chairs, MANP Member
Public Benefit +
Accounta
b
ility
Required
IRS Determination Letter and Forms 1023, 990 (and variants) for the last three years (on file and publicly available, redacted to maintain donor confidentiality) (US – 26 USC § 6104(d))
Submission of Annual Report to Maine Secretary of State, if incorporated (ME – 13-B MRS § 1301)
Compliance with Sarbanes-Oxley document destruction law (US – 18 USC § 1519)
Federal, state and local licenses for services provided, if applicable (US/ME)Recommended
Organizational annual report (publicly available, distinct from Annual Report required to be filed with Maine Secretary of State) made available tostakeholders
Written document retention and destruction policy
Opportunities for stakeholder engagement in planning and/or decision-making
Regular measurement and communication of mission impact (see evaluation section)Recommended as Applicable
Adoption of industry-specific professional standards or code of ethicsPlanning
Required
Any material changes to organizational purpose and activities to the IRS. (US – 26 U.S.C. § 501(c)(3))
Any changes to the Articles of Incorporation to the Secretary of State, if incorporated. (ME – 13-B MRS § 802)Recommended
Mission statement
Vision statement
Value statement
Community needs/assets assessment (every 3-5 years)
Mission-driven strategic plan (including system to monitor progress)
Annual operational plan, aligned to strategic plan
Fund development plan
Technology plan
Succession plan
Risk management plan
Disaster plan
Plans informed by and responsive to stakeholder inputGo
v
ernance +
Leadership
Required
Up-to-date Articles of Incorporation (and Articles of Amendment, if applicable) (ME - 13-B MRS §§ 801-805)
Compliance with up-to-date Bylaws (ME - 13-B MRS §§ 601 – 606; 714)
Annual Report and up-to-date registered agent filed with Maine Secretary of State) (ME -13-B MRS § 304-A, 1301)
At least 3 board directors (ME – 13-B MRS § 702)
Required Officers: President, Treasurer, Secretary (ME – 13-B MRS § 710)
Annual meeting of members (If membership organization) (ME – 13-B MRS § 602)
No loans from corporation to directors or officers (ME – 13-B MRS § 712)
No more than 49% financially interested persons on board (ME – 13-B MRS § 713-A)
Compliance with compensation disclosure law (ME – 13-B MRS § 713-A(2-A)
Maintain books, records and minutes (and make available to members, if applicable) (ME – 13-B MRS § 715)Recommended
Up-to-date mission statement (and vision and values statements, if desired)
At least 5 independent and unrelated board members
Directors meet at least quarterly and abide by rules governing quorums and voting
Diversity of board member skills and perspectives
Board membership representative of organization’s constituents and community
Board member recruitment plan
No staff on board beyond ex-officio members without voting status
Board resolutions/minutes book
Board member orientation and training plans
Board and committee policy handbooks, including:
Conflict of interest policy
Whistleblower policy
Board member giving policy
Committee descriptions (purpose, structure, goals and activities)
Board self-assessment plan
Disaster recovery plan
Cultural competency development plan
Annual executive director assessment plan
Executive compensation policy
Leadership succession and transition plan (volunteer and staff leadership)
Risk evaluation and management systems
Liability insurances (directors and officers, general, volunteer, etc.)
Regular board-level dialogue regarding mission impact
Regular environmental scan to assess potential strategic alliances
Board involvement in strategic planningPublic P
o
licy +
Ad
vocacy
Required
No activities in support or opposition of any candidate for public office and no participation in political party activities. (US – 26 U.S.C. § 501(c)(3))
Lobbying activities comply with federal limitations (US – 26 U.S.C. § 501(c)(3), § 4911, Treas. Reg. § 1.501(c)(3)-1(c)(3), § 56.4911)
If applicable, Maine Lobbyist/Lobbyist Agent Registration (ME-– 3 MRS §§ 311-326)
If applicable, Federal Lobbyist Registration (US-2 U.S.C. § 1605)
Compliance with Maine Election Practices (21-A M.R.S.A. if lobbying on a ballot question)
No federal funds used for lobbying activities (OMB Circular A-122, § 25)
Report lobbying efforts and expenditures on Schedule A of Form 990Recommended
IRS Form 5768 to make 501(h) Election (if conducting any lobbying)
Advocacy and lobbying policy/plan
Voter engagement plan
Staff training on advocacy rules and techniques
Awareness of public policy that impacts community and/or mission
Ongoing relationship-building with elected officials and community leaders
Participation in collaborative efforts to support the formation and amendment of public policy consistent with the organization’s missionEv
alua
tion
Required
NoneRecommended
Both process and outcome evaluation strategies
Specific, measurable performance indicators for all programs/services and systems to monitor progress
Measures are comparable to any relevant, generally accepted benchmarks
Multiple strategies for gathering stakeholder input
Culturally sensitive evaluation practices
Evaluation undertaken in accordance with human subject protection protocols (Title 45 CFR Part 46 Code of Federal Regulations)
Adequate resources appropriated to ensure ongoing evaluation
Staff trained in evaluation methods, and/or guidance sought from external professional evaluators
Evaluation results inform planning processes
Periodic community needs/assets assessmentStr
a
tegic
Alliances
Required
NoneRecommended
Foster relationships with organizations across all sectors to advance mission
Periodic environmental scan to assess opportunities for alliances
Written policies and procedures to guide assessment of strategic alliance opportunities
Memo of agreement/understanding (for each collaborative commitment)Recommended as Applicable
Written policies governing activities of local chapters, branches or affiliates
Proper establishment and management of fiscal sponsorships. (US - See IRS Rev. Rul. 252, Rev. Rul. 68-489.)Mark
eting +
Comm
unica
tions
Required
A nonprofit must meet all federal and state requirements for public disclosure. (See Public Benefit + Accountability section)
Compliance with Spam Law (US - 15 U.S.C. § 7701)Recommended
All basic organizational information easily available : Form 990 (as redacted), annual reports, financial statements, fees and services, and contactinformation
Board, staff and other stakeholders involved as organization ambassadors
Marketing goals
Communications and marketing plans
Marketing and communications ethical/professional standards
Established brand
Graphic elements and standards to support brand
Policies and procedures to ensure brand integrity
Confidentiality/openness policies and procedures
Crisis communication plan
Spokesperson(s) authorized to make public statements
Process for developing statements and positions on issues
Policy outlining expectations for board/staff differentiation of personal opinion and organizational position
Policies and procedures to encourage and guide internal communication
Social media policy
Grievance procedureF
inancial
Mana
gement
Required
Submission of appropriate IRS Form 990 annually (see IRS Publication 4741) (US – 26 USC § 6033)
Compliance with Public Support Test (US – 26 USC § 170(b)(1)(A)(vi) or § 509(a) (2)) (if relying on public support tests for public charity status)
Assets used solely for charitable mission of organization, no excess benefit transactions (US – 26 USC §§ 501(c)(3), 4958)
Charitable solicitation registration and reporting compliance (see Fund + Resource Development section)
Reasonable executive compensation (US – 26 USC § 4958)
Financial system supports segregation of grant/donated funds
Compliance With Uniform Prudent Management of Institutional Funds Act (Investment management standards for all nonprofits; additional requirements if have formal endowment or restricted funds) (ME – 13 MRS § 5101)
IRS Form 1099-MISC (if paid Independent Contractor $600 or more in calendar year) (US – 26 USC § 6041)
Report of Foreign Bank and Financial Accounts (FBAR), IRS Form TD-F 90.22.1 (if hold over $10,000 in foreign bank accounts) (US – 31 USC § 5314, Treas. Reg. 31 CFR 103)
If receive Federal dollars, compliance with Office of Management and Budget (OMB) Circulars A-133, A-110 and A-122. If expend more than $500,000 in Federal funds for its operations, completion of a Single Audit.Recommended
Asset and cash management policies and procedures
Annual, balanced budget (revenue/expenses), with majority spending on mission-driven programs, and adequate resources for effective administration, including evaluation, technology and fundraising costs
Internal control procedures, including:
Spending limits policy
Signature authority
Regular review of bank and credit card statements by at least two individuals
Documentation of accounting policies and systems (meet Financial Accounting Standards Board (FASB) and/or Government Accounting Standards Board (GASB) requirements)
Financial reserve
Chart of Accounts appropriate to the nonprofit’s structure and mission
Contract management policies and procedures (bidding system, contracts, evaluation and monitoring tools)
Expense reimbursement policy and procedures that meet IRS “Accountable Plan” standards
Financial records retention policy, as part of larger document retention and destruction policies
Training for directors on fiscal oversight responsibilities
Conflict of interest policy
Whistleblower protection policies and proceduresF
inancial
Mana
gement
Recommended As Applicable
Audit committee policies and procedures (for larger organizations)
Business credit card use policy
Payment card industry data security standards (PCI DSS) compliance, if process credit card payments
Maine Sales and Use Tax exemption (see http://www.state.me.us/revenue/salesuse/exemptions/exemptions.html for list of exempt categories)
Audit (if revenue > $1 million) or financial review (if revenue > $250,000)
Nonprofit bulk-mailing postage permit (if 200 or more on mailing list)
Investment policyT
e
chnology
Required
NoneRecommended
Technology plan
Technology and equipment infrastructure to enhance and streamline mission-achievement (phones, computers, internet access, fax machine, etc.)
Management information systems (MIS) policies and procedures, including security policies and procedures
Resourced and intentional website and social media presence
Information, technology and social media personal use policy
Off-site electronic backup (of all data)
Surge protectors, virus scans, firewalls, anti-spyware and passwords (for all computers)
Funded equipment depreciation
Responsibility for information/technology systems shared by multiple people
Appropriate training for staff on relevant information/technology systems
Security and privacy policies posted on website
Catastrophic recovery planRecommended As Applicable
Computer networking and remote access strategies, if applicable
Payment card industry data security standards compliance (if accept credit card payments)Staff +
V
o
lunteer
Mana
gement
Required (if 1+ employees)
Compensation not unreasonably high (US – 26 USC § 4958)
Compliance with Whistleblower Protection Laws (US -18 USC § 1107 / ME - 26 MRS §§ 833 – 840)
Payroll and income tax withholdings/filings) (US – 26 U.S.C. § 3402 / ME – 36 MRS § 5250)
Report all hires to Maine Department of Human Services (to improve enforcement of child support obligations) (ME - 19-A MRS § 2154)
Workers Compensation Insurance (ME – Title 39-A MRS)
Maine Human Rights Act (prohibits discrimination based on: race, sex, sexual orientation, physical or mental disability, religion, ancestry or national origin, and age) (ME – 5 MRS §§ 4551 - 4634)
Minimum Wage Laws – (US - 29 USC §201 et seq./ME – 26 MRS §§ 661 – 672)
Overtime Laws – US - 29 USC §201 et seq./ ME – 26 MRS §§ 603, 664
Federal and Maine Equal Pay Law (US – 29 U.S.C. § 206(d) / ME-26 MRS § 628)
Wage Payment Statutes (ME – 26 MRS §§ 621 – 636)
Child Labor Laws (US - 29 USC §201 et seq. / ME - 26 MRS §§ 771 - 785)
Proper classification as “employee” or “independent contractor” (US - IRS Treasury Reg. § 31.3121(d)-1(c), 31.3401(c)-1(b) / ME – Various (workers compensation, Maine income tax, unemployment compensation insurance)
Preference to Maine Workers and Contractors (ME – 26 MRS § 1301)
Recovery of Overcompensation (ME – 26 MRS § 635)
Medical Examination Fees and Application Fees (ME – 26 MRS §§ 592, 594)
Smoker’s Rights Statute (ME – 26 MRS § 597)
Maine Substance Abuse Testing Law (ME - 26 MRS §§ 681 – 690)
Maine and Federal Fair Credit Reporting Acts (US - 15 U.S.C. § 1681 / ME – 10 M.R.S. § 1311)
Employment Eligibility Documentation (US - 8 USC 1324a/ ME – 26 MRS §§ 871 - 872)
Uniformed Services Employment and Reemployment Rights Act of 1994 (US - 38 U.S.C. §§ 4301 – 4335)
Employment Leave For Victims of Violence (ME – 26 MRS § 850)
Military Leave Law (ME – 26 MRS §§ 811 – 814)
Legislator Leave Law (ME – 26 MRS §§ 821 – 824)
Leave During Extreme Public Health Emergency (ME – 26 MRS § 875)Federal Required Postings (US)
EEOC Consolidated Poster
OSHA Poster
Wage and Hour Poster
Employee Polygraph Protection Act PosterMaine Required Postings for All Employers (ME)
Workers’ Compensation Poster
Minimum Wage Poster
Protection of Employees Poster
Regulation of Employment Poster
Employment-At-Will Poster
Sexual Harassment Information Poster
Whistleblower’s Protection Act Poster
Child Labor Law Poster
Smoking PolicyPersonnel Records
Confidential records (usually organized in employee-specific files) for each employee (and in some cases a briefer file for volunteers). Note: special rules apply for maintaining medical records separate from personnel files under Americans With Disabilities Act and HIPPA if enrolled in a group health plan. Note: employees have right to view their personnel files. (ME / US – Various Statutes and Case Law)
Time sheets for hourly employees (ME – 26 M.R.S. §§ 622, 631)
Tax forms (W-4, and annual W-2/3) (US – 26 U.S.C. § 3402)
Employment Eligibility Verification Form I-9 (kept in separate folder) (US - 8 USC 1324a / ME – 26 MRS §§ 871 - 872))
Maine Withholding Tax Forms (ME – 36 MRS § 5250)
Background Check Documentation (Required for certain licensed organizations or jobs; recommended any time a person is working with children or vulnerable adults) (ME – Various Statutes)Required (if offering employee benefits)
Benefits documentation – varies according to type of plan. (US – For 403(b) plans. See http://www.dol.gov/ebsa/403b.html)Required (if 2+ employees)
Maine Video Display Terminal Law and Poster (ME-26 MRS §§ 251 - 252)
National Labor Relations Act and Poster (New as of 2012)(US-29 USC §§ 151-169)Required (if 3+ employees)
The Maine Rest Break Statute (ME-26 MRS § 601)Required (if 4+ employees)
Maine Unemployment Tax, if meet “4 for 20” provision and no exemptions apply. (ME – 26 MRS § 1043(11)(A-1)(3))
Maine Employment Security Law Poster (if required to pay unemployment tax)Required (if 5+ employees)
Maine Video Display Training Law (provided both orally and in writing) (ME-26 MRS §§ 251 - 252)Required (if 15+ employees)
Civil Rights Act of 1964 (Prohibits discrimination based on race, color, religion, sex, or national origin --may also apply to volunteers) (US-42 USC § 2000e et seq.)
Americans with Disabilities Act of 1990 (US-42 USC § 12101 et seq.)
Maine Family Medical Leave Law (ME-26 MRS §§ 843 – 848)Staff +
V
o
lunteer
Mana
gement
Staff +
V
o
lunteer
Mana
gement
Sexual Harassment Training (provided for all new employees within one year) (ME-26 MRS §§ 806 – 807)Required (if 20+ employees)
Age Discrimination in Employment Act of 1967 (Prohibits age-baseddiscrimination against individuals aged 40 and over (US – 29 USC § 621 et seq.)
